Bret Clark, The Daily Record Newswire
The Affordable Care Act imposes significant new reporting requirements on employers, and unless they prepare now, they will be hard pressed to satisfy the January 2016 deadline.
The IRS recently finalized the forms and instructions employers will use to report their compliance with the Affordable Care Act's shared responsibility requirements, which impose penalties on large employers that do not offer health coverage to their employees.
Accordingly, large employers (employers averaging 50 or more full-time and full-time equivalent employees, determined by counting 120 part-time hours as one full-time employee) must provide a Form 1095-C on or before January 31, 2016, to each employee who was a full-time employee at any time in 2015. Among other information, each Form 1095-C must include the following:
- Each month that the employee was a full-time employee.
- Each month the employee was offered coverage.
- Whether the coverage had minimum value (determined in accordance with IRS rules).
- The cost of employee-only coverage.
- Whether any safe harbors or transition relief apply for compliance with the shared responsibility requirements.
If the employer sponsors a self-funded health plan, the employer must report coverage actually provided to all employees and their family members, by month.
In addition, these same employers must provide copies of the Form 1095-Cs to the IRS along with a Form 1094-C aggregating the information on the Form 1095-Cs by February 29, 2016, or, if filed electronically, March 31, 2016. The Form 1094-C/1095-C reporting requirements are referred to below as the Reporting Requirements.
Compiling all of the information needed from various service providers will be a significant challenge for most employers.
In order to prepare to comply with the reporting requirements, employers should do the following:
-Determine large employer status. Employers that averaged 50 or more full-time employees/full-time employee equivalents per month during 2014 must satisfy the Reporting Requirements for 2015. Significantly, employers with between 50 and 100 full-time employees/full-time employee equivalents are not subject to the shared responsibility requirements for 2015 but they are still required to satisfy the Reporting Requirements and indicate on the Form 1094-C that they are exempt from the shared responsibility requirements. Separate employers with significant common ownership (generally 80 percent or more) are aggregated for the purpose of calculating large employer status.
- Determine who has the reporting obligation. Even though employers with significant common ownership are aggregated for the purpose of determining large employer status, each separate employer is responsible for the Reporting Requirements with respect to its employees. For example, if a parent company sponsors a group health plan that covers multiple subsidiaries, the parent may file on behalf of the subsidiaries, but it must file a separate Form 1094-C for each subsidiary.
- Identify full-time employees. Full-time employees include employees who average 30 or more hours per week, determined in accordance with detailed guidance provided by the IRS. Even employers who have decided to pay the shared responsibility penalties are required to identify their full-time employees in order to calculate the penalty amount.
- Identify service providers with information. Generally, no single service provider has all the information required to comply with these reporting requirements. For example, a payroll provider may have the hours data needed to compute whether an employee is full-time, but it may not have coverage data. Employers must identify which service providers have required information and confirm that the information will be available when needed for reporting. Employers should also determine who will compile the information and prepare the Forms. Many payroll providers are preparing systems to assist in this process, but employers should confirm that these systems will be in place in time to meet applicable deadlines and will be able to compile data from multiple sources for all of 2015.
Although employers will likely need to work with multiple parties to comply with the reporting requirements, ultimate responsibility, and liability, remains with the employer.
Published: Thu, Apr 16, 2015
